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AS FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 16, 2011
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AdvisorShares Trust
/s/ Noah Hamman
Noah Hamman
Chairman of the Board of Trustees,
Chief Executive Officer, Principal
Financial Officer and President
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Signature
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Title
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Date
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/s/ Noah Hamman
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Chairman of the Board of Trustees,
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November 16, 2011
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Noah Hamman
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Chief Executive Officer,
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Principal Financial Officer and
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President
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*
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Trustee
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November 16, 2011
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Elizabeth Piper/Bach
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*
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Trustee
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November 16, 2011
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William G. McVay
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*
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Secretary, Chief Compliance
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November 16, 2011
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Dan Ahrens
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Officer and Treasurer
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Exhibit Number
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Description
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EX-101.INS
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XBRL Instance Document
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EX-101.SCH
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XBRL Taxonomy Extension Schema Document
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EX-101.CAL
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XBRL Taxonomy Extension Calculation Linkbase
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EX-101.DEF
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XBRL Taxonomy Extension Definition Linkbase
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EX-101.LAB
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XBRL Taxonomy Extension Labels Linkbase
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EX-101.PRE
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XBRL Taxomony Extension Presentation Linkbase
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| Label | Element | Value |
|---|---|---|
| Risk/Return: | rr_RiskReturnAbstract | |
| Document Type | dei_DocumentType | 485BPOS |
| Document Period End Date | dei_DocumentPeriodEndDate | Oct. 31, 2011 |
| Registrant Name | dei_EntityRegistrantName | AdvisorShares Trust |
| Central Index Key | dei_EntityCentralIndexKey | 0001408970 |
| Amendment Flag | dei_AmendmentFlag | false |
| Document Creation Date | dei_DocumentCreationDate | Oct. 28, 2011 |
| Document Effective Date | dei_DocumentEffectiveDate | Oct. 31, 2011 |
STAR(TM) Global Buy-Write ETF (Prospectus Summary) | STAR(TM) Global Buy-Write ETF | STAR(TM) Global Buy-Write ETF | ||
| Risk/Return: | rr_RiskReturnAbstract | |
| Trading Symbol | dei_TradingSymbol | VEGA |
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| Label | Element | Value | ||||||
|---|---|---|---|---|---|---|---|---|
| Risk/Return: | rr_RiskReturnAbstract | |||||||
| ProspectusDate | rr_ProspectusDate | Oct. 30, 2011 | ||||||
STAR(TM) Global Buy-Write ETF (Prospectus Summary) | STAR(TM) Global Buy-Write ETF | ||||||||
| Risk/Return: | rr_RiskReturnAbstract | |||||||
| Risk/Return, Heading | rr_RiskReturnHeading | STAR™ Global Buy-Write ETF | ||||||
| Investment Objective, Heading | rr_ObjectiveHeading | INVESTMENT OBJECTIVE | ||||||
| investment Objective, Primary | rr_ObjectivePrimaryTextBlock | The STAR™ Global Buy-Write ETF (the "Fund") seeks consistent repeatable returns across all market cycles. | ||||||
| Expense, Heading | rr_ExpenseHeading | FUND FEES AND EXPENSES | ||||||
| Expense, Narrative | rr_ExpenseNarrativeTextBlock | This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. Most investors will incur customary brokerage commissions when buying or selling shares of the Fund, which are not reflected in the table below. | ||||||
| Shareholder Fees, Caption | rr_ShareholderFeesCaption | SHAREHOLDER FEES (fees paid directly from your investment) None | ||||||
| Operating Expenses, Caption | rr_OperatingExpensesCaption | ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage of the value of your investment) | ||||||
| Portfolio Turnover, Heading | rr_PortfolioTurnoverHeading | PORTFOLIO TURNOVER | ||||||
| Portfolio Turnover | rr_PortfolioTurnoverTextBlock | The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in Total Annual Fund Operating Expenses or in the Example, affect the Fund's performance. This rate excludes the value of portfolio securities received or delivered as a result of in-kind creations or redemptions of the Fund's shares. | ||||||
| Other Expenses, New Fund, Based on Estimates | rr_OtherExpensesNewFundBasedOnEstimates | Because the Fund is new, "Other Expenses" are based on estimated amounts for the current fiscal year. | ||||||
| Acquired Fund Fees and Expenses, Based on Estimates | rr_AcquiredFundFeesAndExpensesBasedOnEstimates | As a shareholder in certain exchange-traded funds (the "Acquired Funds"), the Fund will indirectly bear its proportionate share of the fees and expenses of the Acquired Funds. "Acquired Fund Fees and Expenses" are based upon estimated amounts for the current fiscal year. Acquired Fund Fees and Expenses do not reflect the operating expenses of exchange traded products that are not investment companies in which the Fund invests, including ETNs and exchange traded pooled investment vehicles not registered pursuant to the Investment Company Act of 1940. | ||||||
| Expenses, Not Correlated to Ratio Due to Acquired Fund Fees | rr_ExpensesNotCorrelatedToRatioDueToAcquiredFundFees | The Total Annual Fund Operating Expenses in this fee table will not correlate to the expense ratios in the Fund's financial highlights(and the Fund's financial statements) because the financial highlights include only the Fund's direct operating expenses and do not include Acquired Fund Fees and Expenses. | ||||||
| Expense Example, Heading | rr_ExpenseExampleHeading | EXAMPLE | ||||||
| Expense Example, Narrative | rr_ExpenseExampleNarrativeTextBlock | This Example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other funds. This Example does not take into account creation or redemption transaction fees, or the brokerage commissions that you pay when purchasing or selling shares of the Fund. If commissions were included, your costs would be higher. The Example assumes that you invest $10,000 in the Fund for the time periods indicated and then sell all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: | ||||||
| Investment Strategy, Heading | rr_StrategyHeading | PRINCIPAL INVESTMENT STRATEGIES | ||||||
| Investment Strategy, Narrative | rr_StrategyNarrativeTextBlock | The Fund is a "fund of funds" and intends to invest primarily in exchange-traded
funds ("ETFs") and exchange-traded notes ("ETNs") that seek to track a
diversified basket of global indices and investment sectors and that meet
certain selection criteria established by Partnervest Advisory Services, LLC
(the "Sub-Advisor"). The Fund also may invest, subject to the same selection
criteria, in exchange-traded pooled investment vehicles that invest directly in
commodities or currencies and that are registered pursuant to the Securities Act
of 1933 only (collectively, with ETFs and ETNs, "ETPs"). The Selection criteria
include size, historical track record, diversification among indices, the
correlation of an index to other indices and an ability to write covered call
options on the particular ETP. An ETP may be disposed of should it no longer
meet the selection criteria.
The Sub-Advisor seeks to achieve the Fund's investment objective by using a
proprietary overwrite strategy known as Volatility Enhanced Global Appreciation
("VEGA"). VEGA uses the Fund's portfolio investments in ETPs in combination with
call options on the Fund's portfolio investments to seek cumulative price
appreciation from the portfolio's global exposure while generating an additional
return stream from the sale of covered call and/or cash-secured put options. A
covered call option involves holding a long position in a particular asset, in
this case shares of an ETP, and writing a call option on that same asset with
the goal of realizing additional income from the option premium. A put option is
a contract that gives the owner of the option the right to sell a specified
amount of the asset underlying the option at a specified price (the "strike
price") within a specified time. When a put option is exercised or assigned, the
owner of the option is obligated to purchase the requisite amount of the asset
underlying the option to complete the sale. A put option is considered
cash-secured when the owner of the put option segregates an amount of cash or
cash equivalents sufficient to cover the purchase price of the asset underlying
the option. To the extent cash and cash equivalents in the Fund's portfolio
serve as collateral for cash-secured put options, such cash and cash equivalents
may not be invested in ETPs, additional options or other similar investments in
pursuit of the Fund's investment objective. Rather, on a day-to-day basis, such
collateral may be invested in U.S. Government securities, short-term, high
quality fixed income securities, money market instruments, cash, and other cash
equivalents with maturities of one year or less, or ETFs that hold such
investments. | ||||||
| Risk, Heading | rr_RiskHeading | PRINCIPAL RISKS OF INVESTING IN THE FUND | ||||||
| Risk, Narrative | rr_RiskNarrativeTextBlock | The Fund is subject to a number of risks that may affect the value of its
shares, including:
Allocation Risk. The Fund's particular allocations may have a significant effect
on the Fund's performance. Allocation risk is the risk that the selection of
ETPs and the allocation of assets among such ETPs will cause the Fund to
underperform other funds with a similar investment objective that seek to
achieve their investment objectives by investing directly in the securities held
by ETPs, by investing in a different selection of ETPs, or by pursuing a
different allocation of assets among such ETPs.
Derivative Risk. The Fund intends to invest in derivatives to a significant
extent. Derivatives may be riskier than other types of investments because they
may be more sensitive to changes in economic or market conditions than other
types of investments and could result in losses that significantly exceed the
Fund's original investment. A derivative is a financial contract the value of
which depends on, or is derived from, the value of a financial asset (such as
stock, bond or currency), a physical asset (such as gold) or a market index
(such as the S&P 500 Index). Many derivatives (including option contracts)
create leverage thereby causing the Fund to be more volatile than it would be if
it had not invested in derivatives. Derivatives also expose the Fund to
counterparty risk (the risk that the derivative counterparty will not fulfill
its contractual obligations) and to credit risk.
Early Closing Risk. An unanticipated early closing of the NYSE Arca, Inc. (the
"Exchange") may result in a shareholder's inability to buy or sell shares of the
Fund on that day.
ETN Risk. ETNs are senior, unsecured unsubordinated debt securities issued by an
underwriting bank that are designed to provide returns that are linked to a
particular benchmark less investor fees. ETNs have a maturity date and
generally, are backed only by the creditworthiness of the issuer. As a result,
the value of an ETN may be influenced by time to maturity, level of supply and
demand for the ETN, volatility and lack of liquidity in the underlying market
(e.g., the commodities market), changes in the applicable interest rates, and
changes in the issuer's credit rating and economic, legal, political or
geographic events that affect the referenced market. ETNs also are subject to
market risk and credit risk.
Liquidity Risk. Trading in shares of the Fund or an ETP may be halted because of
market conditions or for reasons that, in the view of the Exchange, make trading
in shares inadvisable. In addition, the Fund's investments in ETNs and certain
exchange-traded pooled investment vehicles may be subject to restrictions on the
amount and timing of any redemptions, which may adversely affect the Fund.
Market Risk. Due to market conditions, the Fund's investments may fluctuate
significantly from day to day. This volatility may cause the value of your
investment in the Fund to decrease.
Options Risk. Writing and purchasing call and put options are highly specialized
activities and entail greater than ordinary investment risks. The successful use
of options depends in part on the future price fluctuations and the degree of
correlation between the options and the securities markets. The value of the
Fund's positions in options fluctuates in response to changes in the value of
the underlying security. The Fund also risks losing all or part of the cash paid
for purchasing call and put options. Fund assets covering written options cannot
be sold while the option is outstanding, unless replaced with similar assets. As
a result, there is a possibility that segregation of a large percentage of the
Fund's assets could affect its portfolio management as well as the ability of
the Fund to meet other current obligations. Unusual market conditions or the
lack of a ready market for any particular option at a specific time may reduce
the effectiveness of the Fund's option strategies, and for these and other
reasons the Fund's option strategies may not reduce the Fund's volatility to the
extent desired. The Fund may reduce its holdings of put options resulting in an
increased exposure to a market decline.
Trading Risk. Shares of the Fund may trade below their NAV. The NAV of shares
will fluctuate with changes in the market value of the Fund's holdings. The
trading prices of shares will fluctuate in accordance with changes in NAV, as
well as market supply and demand.
ETP Investment Risk. Through its investments in ETPs, the Fund will be subject
to the risks associated with the ETPs' investments or reference assets in the
case of ETNs, including the possibility that the value of the securities held or
tracked by an ETP could decrease. These risks include any combination of the
risks described below. The Fund's exposure to a particular risk will be
proportionate to the Fund's overall allocation to the ETPs and the ETPs'
exposure to various security types, market sectors, and geographic regions.
o Commodity Risk. Because certain of the ETPs may have a significant portion of
their assets exposed directly or indirectly to commodities or commodity-linked
securities, developments affecting commodities will have a disproportionate
impact on such ETPs. An ETP's investment in commodities or commodity-linked
derivative instruments may subject the ETP (and indirectly the Fund) to
greater volatility than investments in traditional securities, particularly if
the instruments involve leverage. The value of commodities and
commodity-linked derivative instruments may be affected by changes in overall
market movements, commodity index volatility, changes in interest rates, or
factors affecting a particular industry or commodity, such as drought, floods,
weather, livestock disease, embargoes, tariffs and international economic,
political and regulatory developments.
o Concentration Risk. An ETP may, at various times, concentrate in the
securities or commodities of a particular industry, group of industries, or
sector. When an ETP is overweighted in an industry, group of industries, or
sector, it may be more sensitive to any single economic, business, political,
or regulatory occurrence than a fund that is not overweighted in an industry,
group of industries, or sector.
o Counterparty Risk. Commodity-linked derivatives, repurchase agreements, swap
agreements and other forms of financial instruments that involve
counterparties subject an ETP to the risk that the counterparty could default
on its obligations under the agreement, either through the counterparty's
bankruptcy or failure to perform its obligations.
o Credit Risk. Certain of the ETPs are subject to the risk that a decline in
the credit quality of a portfolio investment or a counterparty to a portfolio
investment could cause the ETP's share price to fall. The ETPs could lose
money if the issuer or guarantor of a portfolio investment or the counterparty
to a derivatives contract fails to make timely principal or interest payments
or otherwise honor its obligations.
o Emerging Markets Risk. There is an increased risk of price volatility
associated with an ETP's investments in emerging market countries, which may
be magnified by currency fluctuations relative to the U.S. dollar.
o Equity Risk. The prices of equity securities in which an ETP invests or is
exposed to rise and fall daily. These price movements may result from factors
affecting individual companies, industries or the securities market as a
whole.
o Foreign Currency Risk. Currency movements may negatively impact the value of
an ETP security even when there is no change in the value of the security in
the issuer's home country. Certain of the ETPs may not hedge against the risk
of currency exchange rate fluctuations, while other ETPs may if there is
volatility in currency exchange rates.
o Foreign Securities Risk. An ETP's investments in foreign issuers involve
certain risks including, but not limited to, risks of adverse changes in
foreign economic, political, regulatory and other conditions, or changes in
currency exchange rates or exchange control regulations (including limitations
on currency movements and exchanges). In certain countries, legal remedies
available to investors may be more limited than those available with respect
to investments in the United States. In addition, the securities of some
foreign companies may be less liquid and, at times, more volatile than
securities of comparable U.S. companies.
o Investment Risk. Similar to an investment in the Fund, an investment in an ETP
is not a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. The Fund may experience
losses with respect to its investment in an ETP. Further, there is no
guarantee that an ETP will be able to achieve its objective.
o Large-Cap Risk. An ETP may invest in large-cap companies. Returns on
investments in stocks of large U.S. companies could trail the returns on
investments in stocks of small- and mid-cap companies or the market as a
whole.
o Mid-Cap Risk. An ETP may invest in mid-cap companies. Mid-cap companies may be
more volatile and more likely than large-cap companies to have limited product
lines, markets or financial resources, or depend on a few key employees.
Returns on investments in stocks of mid-cap companies could trail the returns
on investments in stocks of large-cap companies or the market as a whole.
o Small Cap Risk. An ETP may invest in small-cap companies. Small-cap companies
may be more vulnerable than larger, more established organizations to adverse
business or economic developments. In particular, small-cap companies may have
limited product lines, markets, and financial resources and may be dependent
upon a relatively small management group. These securities may be listed on an
exchange or trade over-the-counter, and may or may not pay dividends. During a
period when small-cap stocks fall behind other types of investments --
large-cap stocks, for instance -- the ETP's performance could be adversely
affected.
As with any fund, there is no guarantee that the Fund will achieve its
investment goal. | ||||||
| Risk, Not Insured Depository Institution | rr_RiskNotInsuredDepositoryInstitution | Similar to an investment in the Fund, an investment in an ETP is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. | ||||||
| Bar Chart and Performance Table, Heading | rr_BarChartAndPerformanceTableHeading | FUND PERFORMANCE | ||||||
| Performance, Narrative | rr_PerformanceNarrativeTextBlock | A comparison of the Fund's performance with that of a broad measure of market performance may give some indication of the risks of an investment in the Fund; however, the Fund is new and, therefore, does not have a performance history for a full calendar year. Of course, once the Fund has performance, this past performance (before and after taxes) does not necessarily indicate how the Fund will perform in the future. Updated performance information is available on the Fund's website at www.advisorshares.com. | ||||||
| Performance, One Year or Less | rr_PerformanceOneYearOrLess | A comparison of the Fund's performance with that of a broad measure of market performance may give some indication of the risks of an investment in the Fund; however, the Fund is new and, therefore, does not have a performance history for a full calendar year. | ||||||
| Performance, Availability Website Address | rr_PerformanceAvailabilityWebSiteAddress | www.advisorshares.com | ||||||
| Performance, Past Does Not Indicate Future | rr_PerformancePastDoesNotIndicateFuture | Of course, once the Fund has performance, this past performance (before and after taxes) does not necessarily indicate how the Fund will perform in the future. | ||||||
STAR(TM) Global Buy-Write ETF | STAR(TM) Global Buy-Write ETF | ||||||||
| Risk/Return: | rr_RiskReturnAbstract | |||||||
| MANAGEMENT FEES | rr_ManagementFeesOverAssets | 1.35% | ||||||
| DISTRIBUTION (12b-1) FEES | rr_DistributionAndService12b1FeesOverAssets | none | ||||||
| OTHER EXPENSES | rr_OtherExpensesOverAssets | 0.24% | [1] | |||||
| ACQUIRED FUND FEES AND EXPENSES | rr_AcquiredFundFeesAndExpensesOverAssets | 0.42% | [2] | |||||
| TOTAL ANNUAL FUND OPERATING EXPENSES | rr_ExpensesOverAssets | 2.01% | [3] | |||||
| Expense Example, With Redemption, 1 Year | rr_ExpenseExampleYear01 | 204 | ||||||
| Expense Example, With Redemption, 3 Years | rr_ExpenseExampleYear03 | 631 | ||||||
| ||||||||
| STAR(TM) Global Buy-Write ETF (Prospectus Summary) | STAR(TM) Global Buy-Write ETF | ||||||||||||||||||||||||
| STAR™ Global Buy-Write ETF | ||||||||||||||||||||||||
| INVESTMENT OBJECTIVE | ||||||||||||||||||||||||
The STAR™ Global Buy-Write ETF (the "Fund") seeks consistent repeatable returns across all market cycles. | ||||||||||||||||||||||||
| FUND FEES AND EXPENSES | ||||||||||||||||||||||||
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. Most investors will incur customary brokerage commissions when buying or selling shares of the Fund, which are not reflected in the table below. | ||||||||||||||||||||||||
| SHAREHOLDER FEES (fees paid directly from your investment) None | ||||||||||||||||||||||||
| ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage of the value of your investment) | ||||||||||||||||||||||||
| ||||||||||||||||||||||||
| EXAMPLE | ||||||||||||||||||||||||
This Example is intended to help you compare the cost of investing in the shares of the Fund with the cost of investing in other funds. This Example does not take into account creation or redemption transaction fees, or the brokerage commissions that you pay when purchasing or selling shares of the Fund. If commissions were included, your costs would be higher. The Example assumes that you invest $10,000 in the Fund for the time periods indicated and then sell all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: | ||||||||||||||||||||||||
| ||||||||||||||||||||||||
| PORTFOLIO TURNOVER | ||||||||||||||||||||||||
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in Total Annual Fund Operating Expenses or in the Example, affect the Fund's performance. This rate excludes the value of portfolio securities received or delivered as a result of in-kind creations or redemptions of the Fund's shares. | ||||||||||||||||||||||||
| PRINCIPAL INVESTMENT STRATEGIES | ||||||||||||||||||||||||
The Fund is a "fund of funds" and intends to invest primarily in exchange-traded
funds ("ETFs") and exchange-traded notes ("ETNs") that seek to track a
diversified basket of global indices and investment sectors and that meet
certain selection criteria established by Partnervest Advisory Services, LLC
(the "Sub-Advisor"). The Fund also may invest, subject to the same selection
criteria, in exchange-traded pooled investment vehicles that invest directly in
commodities or currencies and that are registered pursuant to the Securities Act
of 1933 only (collectively, with ETFs and ETNs, "ETPs"). The Selection criteria
include size, historical track record, diversification among indices, the
correlation of an index to other indices and an ability to write covered call
options on the particular ETP. An ETP may be disposed of should it no longer
meet the selection criteria.
The Sub-Advisor seeks to achieve the Fund's investment objective by using a
proprietary overwrite strategy known as Volatility Enhanced Global Appreciation
("VEGA"). VEGA uses the Fund's portfolio investments in ETPs in combination with
call options on the Fund's portfolio investments to seek cumulative price
appreciation from the portfolio's global exposure while generating an additional
return stream from the sale of covered call and/or cash-secured put options. A
covered call option involves holding a long position in a particular asset, in
this case shares of an ETP, and writing a call option on that same asset with
the goal of realizing additional income from the option premium. A put option is
a contract that gives the owner of the option the right to sell a specified
amount of the asset underlying the option at a specified price (the "strike
price") within a specified time. When a put option is exercised or assigned, the
owner of the option is obligated to purchase the requisite amount of the asset
underlying the option to complete the sale. A put option is considered
cash-secured when the owner of the put option segregates an amount of cash or
cash equivalents sufficient to cover the purchase price of the asset underlying
the option. To the extent cash and cash equivalents in the Fund's portfolio
serve as collateral for cash-secured put options, such cash and cash equivalents
may not be invested in ETPs, additional options or other similar investments in
pursuit of the Fund's investment objective. Rather, on a day-to-day basis, such
collateral may be invested in U.S. Government securities, short-term, high
quality fixed income securities, money market instruments, cash, and other cash
equivalents with maturities of one year or less, or ETFs that hold such
investments. | ||||||||||||||||||||||||
| PRINCIPAL RISKS OF INVESTING IN THE FUND | ||||||||||||||||||||||||
The Fund is subject to a number of risks that may affect the value of its
shares, including:
Allocation Risk. The Fund's particular allocations may have a significant effect
on the Fund's performance. Allocation risk is the risk that the selection of
ETPs and the allocation of assets among such ETPs will cause the Fund to
underperform other funds with a similar investment objective that seek to
achieve their investment objectives by investing directly in the securities held
by ETPs, by investing in a different selection of ETPs, or by pursuing a
different allocation of assets among such ETPs.
Derivative Risk. The Fund intends to invest in derivatives to a significant
extent. Derivatives may be riskier than other types of investments because they
may be more sensitive to changes in economic or market conditions than other
types of investments and could result in losses that significantly exceed the
Fund's original investment. A derivative is a financial contract the value of
which depends on, or is derived from, the value of a financial asset (such as
stock, bond or currency), a physical asset (such as gold) or a market index
(such as the S&P 500 Index). Many derivatives (including option contracts)
create leverage thereby causing the Fund to be more volatile than it would be if
it had not invested in derivatives. Derivatives also expose the Fund to
counterparty risk (the risk that the derivative counterparty will not fulfill
its contractual obligations) and to credit risk.
Early Closing Risk. An unanticipated early closing of the NYSE Arca, Inc. (the
"Exchange") may result in a shareholder's inability to buy or sell shares of the
Fund on that day.
ETN Risk. ETNs are senior, unsecured unsubordinated debt securities issued by an
underwriting bank that are designed to provide returns that are linked to a
particular benchmark less investor fees. ETNs have a maturity date and
generally, are backed only by the creditworthiness of the issuer. As a result,
the value of an ETN may be influenced by time to maturity, level of supply and
demand for the ETN, volatility and lack of liquidity in the underlying market
(e.g., the commodities market), changes in the applicable interest rates, and
changes in the issuer's credit rating and economic, legal, political or
geographic events that affect the referenced market. ETNs also are subject to
market risk and credit risk.
Liquidity Risk. Trading in shares of the Fund or an ETP may be halted because of
market conditions or for reasons that, in the view of the Exchange, make trading
in shares inadvisable. In addition, the Fund's investments in ETNs and certain
exchange-traded pooled investment vehicles may be subject to restrictions on the
amount and timing of any redemptions, which may adversely affect the Fund.
Market Risk. Due to market conditions, the Fund's investments may fluctuate
significantly from day to day. This volatility may cause the value of your
investment in the Fund to decrease.
Options Risk. Writing and purchasing call and put options are highly specialized
activities and entail greater than ordinary investment risks. The successful use
of options depends in part on the future price fluctuations and the degree of
correlation between the options and the securities markets. The value of the
Fund's positions in options fluctuates in response to changes in the value of
the underlying security. The Fund also risks losing all or part of the cash paid
for purchasing call and put options. Fund assets covering written options cannot
be sold while the option is outstanding, unless replaced with similar assets. As
a result, there is a possibility that segregation of a large percentage of the
Fund's assets could affect its portfolio management as well as the ability of
the Fund to meet other current obligations. Unusual market conditions or the
lack of a ready market for any particular option at a specific time may reduce
the effectiveness of the Fund's option strategies, and for these and other
reasons the Fund's option strategies may not reduce the Fund's volatility to the
extent desired. The Fund may reduce its holdings of put options resulting in an
increased exposure to a market decline.
Trading Risk. Shares of the Fund may trade below their NAV. The NAV of shares
will fluctuate with changes in the market value of the Fund's holdings. The
trading prices of shares will fluctuate in accordance with changes in NAV, as
well as market supply and demand.
ETP Investment Risk. Through its investments in ETPs, the Fund will be subject
to the risks associated with the ETPs' investments or reference assets in the
case of ETNs, including the possibility that the value of the securities held or
tracked by an ETP could decrease. These risks include any combination of the
risks described below. The Fund's exposure to a particular risk will be
proportionate to the Fund's overall allocation to the ETPs and the ETPs'
exposure to various security types, market sectors, and geographic regions.
o Commodity Risk. Because certain of the ETPs may have a significant portion of
their assets exposed directly or indirectly to commodities or commodity-linked
securities, developments affecting commodities will have a disproportionate
impact on such ETPs. An ETP's investment in commodities or commodity-linked
derivative instruments may subject the ETP (and indirectly the Fund) to
greater volatility than investments in traditional securities, particularly if
the instruments involve leverage. The value of commodities and
commodity-linked derivative instruments may be affected by changes in overall
market movements, commodity index volatility, changes in interest rates, or
factors affecting a particular industry or commodity, such as drought, floods,
weather, livestock disease, embargoes, tariffs and international economic,
political and regulatory developments.
o Concentration Risk. An ETP may, at various times, concentrate in the
securities or commodities of a particular industry, group of industries, or
sector. When an ETP is overweighted in an industry, group of industries, or
sector, it may be more sensitive to any single economic, business, political,
or regulatory occurrence than a fund that is not overweighted in an industry,
group of industries, or sector.
o Counterparty Risk. Commodity-linked derivatives, repurchase agreements, swap
agreements and other forms of financial instruments that involve
counterparties subject an ETP to the risk that the counterparty could default
on its obligations under the agreement, either through the counterparty's
bankruptcy or failure to perform its obligations.
o Credit Risk. Certain of the ETPs are subject to the risk that a decline in
the credit quality of a portfolio investment or a counterparty to a portfolio
investment could cause the ETP's share price to fall. The ETPs could lose
money if the issuer or guarantor of a portfolio investment or the counterparty
to a derivatives contract fails to make timely principal or interest payments
or otherwise honor its obligations.
o Emerging Markets Risk. There is an increased risk of price volatility
associated with an ETP's investments in emerging market countries, which may
be magnified by currency fluctuations relative to the U.S. dollar.
o Equity Risk. The prices of equity securities in which an ETP invests or is
exposed to rise and fall daily. These price movements may result from factors
affecting individual companies, industries or the securities market as a
whole.
o Foreign Currency Risk. Currency movements may negatively impact the value of
an ETP security even when there is no change in the value of the security in
the issuer's home country. Certain of the ETPs may not hedge against the risk
of currency exchange rate fluctuations, while other ETPs may if there is
volatility in currency exchange rates.
o Foreign Securities Risk. An ETP's investments in foreign issuers involve
certain risks including, but not limited to, risks of adverse changes in
foreign economic, political, regulatory and other conditions, or changes in
currency exchange rates or exchange control regulations (including limitations
on currency movements and exchanges). In certain countries, legal remedies
available to investors may be more limited than those available with respect
to investments in the United States. In addition, the securities of some
foreign companies may be less liquid and, at times, more volatile than
securities of comparable U.S. companies.
o Investment Risk. Similar to an investment in the Fund, an investment in an ETP
is not a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. The Fund may experience
losses with respect to its investment in an ETP. Further, there is no
guarantee that an ETP will be able to achieve its objective.
o Large-Cap Risk. An ETP may invest in large-cap companies. Returns on
investments in stocks of large U.S. companies could trail the returns on
investments in stocks of small- and mid-cap companies or the market as a
whole.
o Mid-Cap Risk. An ETP may invest in mid-cap companies. Mid-cap companies may be
more volatile and more likely than large-cap companies to have limited product
lines, markets or financial resources, or depend on a few key employees.
Returns on investments in stocks of mid-cap companies could trail the returns
on investments in stocks of large-cap companies or the market as a whole.
o Small Cap Risk. An ETP may invest in small-cap companies. Small-cap companies
may be more vulnerable than larger, more established organizations to adverse
business or economic developments. In particular, small-cap companies may have
limited product lines, markets, and financial resources and may be dependent
upon a relatively small management group. These securities may be listed on an
exchange or trade over-the-counter, and may or may not pay dividends. During a
period when small-cap stocks fall behind other types of investments --
large-cap stocks, for instance -- the ETP's performance could be adversely
affected.
As with any fund, there is no guarantee that the Fund will achieve its
investment goal. | ||||||||||||||||||||||||
| FUND PERFORMANCE | ||||||||||||||||||||||||
A comparison of the Fund's performance with that of a broad measure of market performance may give some indication of the risks of an investment in the Fund; however, the Fund is new and, therefore, does not have a performance history for a full calendar year. Of course, once the Fund has performance, this past performance (before and after taxes) does not necessarily indicate how the Fund will perform in the future. Updated performance information is available on the Fund's website at www.advisorshares.com. | ||||||||||||||||||||||||
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